The Business Ethics Blog

So, has big business embraced social networking? Well, the evidence is a bit uneven. There are lots of corporate blogs, including quite a few dedicated to ethics & social responsibility (see, e.g., McDonalds’ CSR blog and CSR@Intel blog). There are also plenty of companies now using Twitter (for example, @Jim_Starbucks and @methodtweet.) But effective use of social media is not exactly universal within the corporate world.

Here’s another data point: In a couple of weeks I’ll be attending & blogging this U.S. Conference Board conference in New York, as a guest of the organizers:

Business Ethics and Compliance Conference: Priorities in Today’s Regulatory and Enforcement Environment.

The conference website describes the goals of the conference this way:

What are we likely to see in the coming year? The risk environment is changing in many areas: antitrust, anti–corruption and FCPA, privacy, export control, fraud, money laundering, government contracting, environmental crimes, human rights violations, insider trading and more. What new risk areas are emerging as a result of new technologies as well as new financial pressures and uncertainties? What changes should you make to your ethics and compliance program, and what needs to be a priority for your company’s leaders?

Sounds interesting over all, but one of the sessions I’ll be most anxious to attend is one called “The Impact of Social Networks and New Communications Technologies.” After all, the use of these new technologies opens up all kinds of new avenues for corporate transparency, along with plenty of new questions about appropriate limits on transparency. Technologies like Twitter have opened up new mechanisms for broadcasting corporate messages and commitments, but have also provided new and potent means by which corporations’ critics (internal and external) can spread their own messages.

And clearly, social media is a topic that’s on the minds of the conference organizers, maybe more than other topics on the agenda. How can I tell? Because the Conference Board is bringing me in not to attend as a professor of Business Ethics — despite the fact that that’s what I do for a living — but as a business ethics blogger. I’ll be blogging (and probably Tweeting) the event: so readers of this blog — including business executives, students, critics, etc. — are going to know, through this medium, what sorts of things are being said at a conference that most won’t get to attend. Anyway, it looks like it will be a great event. Tune in to this channel on April 21 and 22 to hear all about it.

OK, this is entirely hypothetical, though I imagine there are real choices to be made that fit this same pattern.

If you had to choose between safety and reduced environmental impact, which would you choose? What if the safety involved is the safety of your children?

This question, though entirely hypothetical, came to mind as I read the following story about a new “green” method for making rubber for tires, to replace the old petroleum-intensive method:

Goodyear, Genencor Partner on True Green Tire Project

Researchers at Goodyear Tire & Rubber Co. and Genencor are working to create “renewable feedstocks” that would replace petroleum in tires, effectively resulting in a completely “green” tire. And that could happen within five years, they said.

The new tires will be an advance toward greener, more sustainable transportation in a quite literal sense, according to Dr. Joseph McAuliffe, who reported on the technology. The process can use sugars derived from sugar cane, corn, corn cobs, switchgrass or other biomass to produce the ingredient, a biochemical called isoprene, derived from renewable raw materials….

Now, to be perfectly clear, I’m not at all suggesting that there’s anything second-rate about this new “green” rubber. I’m sure they’re working hard to make this new product just as tough and durable and suitable-for-making-tires as regular petroleum-based rubber. But it is of course an obvious question. Rubber quality matters a lot for tires, and so any new form of rubber is going to have to prove that it can perform in prolonged use under harsh conditions.

So, let’s take this new technology and ask a hypothetical question. If “green” tires were to hit the market, and if they a) really were substantially more environmentally friendly but b) were only “nearly” as safe (say, 98% as safe) as old-fashioned rubber tires, would you buy them? Should you?

Marketing is about selling things. Other things being equal, the more you sell, the more effective your marketing has been. Can marketing ever be too effective? Yes, when it’s done it’s done expertly and aimed at kids. Marketing to kids in an ethical way is tricky. It’s hard to imagine saying flat-out that companies should never market to kids. Lots of kids have at least some buying power (transferred to them by adults) and many kids have influence on family expenditures. And it’s not like kids have absolutely no ability to filter information and make good decisions. The fact that they’re kids doesn’t mean they’re stupid. But still, most people agree that if you’re going to market to kids, you’ve got to pull your punches a bit.

On that note, see this story, from The Age: It’s time to go, Ronald

A coalition of health professionals, parents and corporate accountability advocates is calling for Ronald McDonald to retire as a spokesman for the world’s largest restaurant chain, saying he has too much influence on kids.

Corporate Accountability International, which has waged campaigns against bottled water companies and tobacco companies in the US, said it plans to present the results of a survey on Wednesday showing that most Americans agree….

So, is is it OK to use a clown to market what is generally pretty unhealthy food to kids? Kids do love clowns: they’re happy, friendly, welcoming, accepting. Now, it’s worth noting that cigarette maker R. J. Reynolds retired its own kid-friendly marketing device, Joe Camel, nearly 13 years ago, in the face of criticism that using a cartoon character to sell a deadly product was, well, a bit over the top. Hmm, see the parallel? Now, McDonalds isn’t R. J. Reynolds. However unhealthy most of McDonalds’ food is, it’s still not cigarettes. But, as food choices go, eating at McDonalds is pretty bad. At least it’s bad as a habit. Sane, sensible adults can exercise restraint, and do their best not to let it become a habit. And maybe that’s fine: eating at McD’s once in a while isn’t going to hurt you. But kids don’t necessarily have the same capacity (or responsibility) for restraint. And for junk food, as for cigarettes, it’s pretty reasonable to think that they core marketing strategy is to get ’em while they’re young.

I recently argued in another venue that it can be hard for companies to show restraint. Aiming to sell “a little less” to kids or to market to them “a little less aggressively” is probably a hard promise to keep. But McDonalds has a chance to take a concrete, discrete step here, one that doesn’t involve any mushy grey zones. All they have to do is cut a mascot that’s clearly aimed at promoting their mostly-unhealthy product to kids. Yes, Ronald, it really is time to go.

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Here are a few related blog entries:

• Ethics of Advertising Bad Food to Kids
• Kudos to Kellog (Fewer Ads Aimed at Kids)
• Marketing to Kids

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HT to Andrew Potter.

Just what is the relationship between shareholders and the companies in which they hold shares? People who own shares through pension plans, mutual funds, and so on, don’t even know the names of the companies they’ve invested in. And yet, in some sense, the managers of a company are supposed to work “for” shareholders. What does that mean?

As illustration, see, for example, this story recent story about Toyota and the currently-not-so-cozy relationship it has with its shareholders: Toyota Shareholders Sue Over Fallen Stock Price

Toyota shareholders incensed over a sudden drop in the Japanese automaker’s stock price are heading to court with lawsuits claiming company executives deliberately misled investors and the public about the depth of accelerator problems in millions of its vehicles….

Some people will find this odd. How can shareholders sue the company? Don’t they own the company? Well, it would be odd, if in fact that were true.

A good critique of the notion that shareholders own the company can be found in John Boatright’s Fiduciary Duties and the Shareholder-Management Relation: or, What’s so Special About Shareholders?, in which he argues that, if there is any sense in which shareholders can be thought of as owners, it is in a very special sense that differs markedly from other examples of ownership of property. Boatright writes:

Ownership of a corporation is different, of course, from the ownership of personal assets. Most notably, shareholders do not have a right to possess and use corporate assets as they would their own; instead, they create a fictitious person to conduct business, with the shareholders as the beneficiaries….

And it’s often noted that, as a shareholder, you don’t automatically have the right even to set foot on corporate property. That’s a pretty strange form of ownership.

(The notion that shareholders do not own corporations is also a favourite theme of law professor Steven Bainbridge. See his blog entry, Who Owns the Corporation? Nobody.)

Others hold that, yes, shareholders do own the company — it’s just that it’s an unusual form of ownership, set up to meet particular needs. The question, then, isn’t simply whether shareholders ought to be regarded as owners. It’s rather to what extent shareholders ought to be regarded as owners, for what purposes, and what the legal and ethical implications of this odd form of ownership are. In the case of Toyota, a judge is going to have to decide, in effet, whether the company’s shareholders are owners whose employees (managers) failed in their duty of loyal service, or whether, instead, the shareholders are merely another stakeholder group that was let down.

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Thanks to Wayne Norman for showing me this story, and for pointing out this implication.

OK, this one is personal.

I wanted to buy a new iPod. I decided to order via Apple’s website in part because when you order online, Apple will engrave the iPod for you, at no extra cost.

I wanted to get one of my favourite philosophical quotations engraved. The quotation (from David Hume’s 1739 masterpiece, A Treatise of Human Nature) says: “Reason is, and ought only to be the slave of the passions.”

But no. The Apple website refused my request. “Inappropriate message text.”

Huh? “Inappropriate”? A call to Customer Support confirmed my suspicion: the word “slave” is not allowed. You can’t have just anything engraved on your iPod. Certain words are forbidden. Uh, OK. I get that. Apple is providing a service, and they don’t want to engrave ridiculously offensive slogans on their merchandise. And there’s no free speech issue, here. You’re free to get someone else to engrave whatever you want on your iPod once you’ve got it. Apple just doesn’t want to do it for you.

But why is the word “slave,” in particular, forbidden? I don’t know, and the nice Customer Service rep didn’t know either. One possibility is the term’s association with the ugly, mostly-historical practice of human slavery. The other possibility is the term’s sexualization in the world of BDSM. Not exactly a dirty word, but (or so I supposed at first) Apple is just being super-cautious, and forbidding any word with vaguely sexual connotations.

So, just what words are forbidden? I doubt that list is made public, but a little experimentation (and imagination) turned up some interesting patterns, as well as some hilarious inconsistencies.

The word “slave” is forbidden, but “master” is permitted.
The term “vaginal” isn’t allowed, but “anal” is.
“Masturbation” is out, but “rape” is OK.
You can’t have “boobs,” but you can have “nipples.”
“Slut” is not permitted, but “whore” is fine.

I now officially have no idea what kind of filter Apple is using.

Interestingly, only six out of seven of George Carlin’s “Seven Words You Can Never Say on Television” are forbidden. The one that refers to someone who performs fellatio — itself a forbidden word — is allowed.

What are a company’s responsibilities when a small amount of its product doesn’t do anything bad, but when higher levels of consumption have bad consequences either for the individual consumer, or for the community?

That’s the topic of a guest posting by me today over at CSRwire, called “Social Responsibility as Restraint”.

Here’s the opening paragraph…

Restraint is tough. Anyone who has ever dieted, even just to lose five pounds, knows that. Our bodies whisper, “more…more….” even as the conscious part of our brain tells us that more would be bad. The hard thing is, just one more bite of cake really isn’t going to hurt us. The calories in one bite of cake are trivial. But we know that in the long run, all those “one more bites” are going to add up….

Basically I advance the idea that for certain categories of products — namely, ones that are harmless on a case-by-case basis but dangerous in the aggregate — the social responsibilities of companies might imply looking not at ways to cut back on production or sales, but to look at specific, concrete categories of sales that they could eliminate (e.g., sale of sugary colas to kids).

Anyway, you can check it out over at CSRwire.

I’m just back from speaking at a terrific conference in New York on Corporate Citizenship, sponsored by The Economist. The panel I was on included senior executives from both Coca-Cola and Procter & Gamble. During Q&A, I kept hoping someone in the audience would ask a particular question that was on my own mind. Both of those companies face one particular challenge: they both produce at least one product that, socially, we’d like them to sell less of. The world would be a better place if less sugary cola was consumed, and the Pampers brand diapers made by P&G are currently being archived for eternity in our landfills. There’s a hard ethical problem there, especially for Coca-Cola: their product is arguably perfectly harmless when consumed in moderation, but many people don’t consume it in moderation. Coke knows that. They’re helping feed the obesity epidemic — but they’re also selling something that many people enjoy in very safe moderation. But if colas (and other sugary drinks) are feeding the obesity epidemic, their contribution to that epidemic varies only in degree from other kinds of foods and beverages that are subject to over-use. If it’s wrong to sell cola, then it’s arguably also wrong to sell ice cream, chocolate cake, and (gasp!) wine. All of those have plenty of calories, and all of them can make you fat.

As it happens, here’s a related story from just 2 days ago, by Bruce Horovitz, for USA Today: Pepsi is dropping out of schools worldwide by 2012

The iPod Generation will get a global lesson in healthier beverages from an unlikely source: Pepsi.
PepsiCo on Tuesday announced plans to voluntarily remove high-calorie sweetened drinks from schools for kids up to age 18 in more than 200 countries by 2012. Coke and Pepsi agreed to stop selling sugary drinks in U.S. schools in 2006….

Whether the product in question is food or something else, marketing to kids is arguably “low-hanging fruit,” ethically. It’s relatively clear that (most?) young people are less-able to make good dietary decisions than are (most?) adults. Add to that two special features of teens in particular. First, they famously think they’re indestructible, so they’re unlikely to be scared off by warnings that a product is unhealthy for them. And second, they’re in the process of forming patterns of food consumption that are likely to be with them for life. So it’s pretty easy to make an argument that it’s especially socially irresponsible to market sugary drinks to kids & teens.

Now, I’m sure some people wish Coke & Pepsi would both go farther, and restrict their marketing even more. But maybe by taking their beverages out of schools, these companies are aiming at a kind of compromise. Maybe this kind of decision on the part of Pepsi is analogous to the kind of behaviour we all ought to exercise in our own consumption of sweetened drinks: not utter abstinence, but a reasonable degree of moderation.

Is this the Golden Age of ethical business?

Yes, I’m serious. Bear with me.

Consider first the values manifested in the modern workplace. Workplaces today, while still far from perfect, are less sexist, less racist, and generally more civilized and humane than at any time in history. Yes, many workplaces are still less-than-great. Some are downright bad. But ask yourself this: when, generally, were they better?

Consider also that in 2010, businesses are more transparent and accountable — due in no small part, of course, to the effects of smart regulation and the advocacy work of NGOs and corporate watchdogs — than ever before. The public is paying attention, and between news agencies and the internet they have access to a lot of information about corporate behaviour. Corporations know that, and are by and large responding. We live in an era in which “Corporate Ethics Officer” is an actual job title, and in which entire businesses are built on the idea that consumers care about how ethical the companies they buy from are.

Now, you may ask, what about all those scandals? Well, I noted above that the media and internet are important sources of information. But while the media in particular are a vital source of information about corporate behaviour, it’s important not to mistake trends in reporting as trends in the world. If you judge only by what you see and read in the news, you’d think that violent crime is up (but it’s not) and that flying is dangerous (but it’s not). The fact that more corporate scandals are reported isn’t really evidence that more corporate scandals are happening. And even if it were the case that more wrongdoing is going on at high levels in the world of business, that doesn’t mean that business in general is any less ethical than it was 20 or 50 years ago. Scandals too easily obscure the fact that throughout North America, there are millions of people, working at tens of thousands of companies, making good, honest, ethical decisions day in and day out.

Of course, we can’t literally declare this the “Golden Age.” Normally the “Golden Age” of anything is only declared after the fact. Time, as they say, will tell. And if things go well, businesses may be even more ethical in 10 or 20 years than they are now. We all certainly hope so. But still I’m willing to advance the thesis for discussion that business today, in 2010, is more ethical than it’s ever been in human history.

Now, the rosy picture I’ve painted above is no reason for complacency. There are challenges ahead. Lots still needs to change. It’s important to keep business ethics on the agenda, both in the corporate world and in the public sphere. But that needn’t obscure the good that’s been done. In fact, it’s crucial that we keep in mind that past efforts to improve the ethics of business have met with at least some success. Past success, after all, is likely a crucial part of maintaining hope for an even brighter future.

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(This blog entry is inspired by comments I’ve prepared for this event, put on by The Economist, and which I’m speaking at today: Corporate Citizenship 2010: Doing Well by Doing Good.)